Daily Update: October 29, 2021

Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy.

COP26 is on the horizon—against the backdrop of a worsening  global climate crisis, with rapidly warming temperatures and extreme weather events becoming more common. As global leaders descend on Glasgow for talks starting Oct. 31, discussions are expected to delve into the development of new climate funds, the energy transition from fossil fuels, the role of the private sector in decarbonization, green free trade, how countries can align their economical and climate goals, and more. 

Companies and countries alike have accelerated their ambitious decarbonization targets ahead of COP26. But many private and public sector experts perceive climate progress to be insufficient, and feel anxious about the bridge between current conditions and the future state needed to avoid international catastrophe. COP26 could indeed be the last, and best, chance to combat climate change as the international community’s window to maintain global warming at or below 1.5 degrees Celsius shrinks. 

Stakeholders leading COP26, which will be hosted by the U.K. and Italy, aim for the conference to result in a series of outcomes: firmer emissions-reduction targets, an increase of support for nations struggling to adapt to climate change, climate finance secured for developing nations, and negotiations between signatories, according to S&P Global Market Intelligence. 

“Every CEO is saying that what he or she wants most is predictability. If we could have a stronger focus on interim targets, what needs to happen by 2030, that would be good,” Yvo de Boer, currently the president of the board of the carbon offsetting organization advocating for more robust global emissions accounting Gold Standard and previously the executive secretary of the U.N. Framework Convention on Climate Change from 2006 to 2010, told S&P Global Market Intelligence in an interview. “Policy makers love talking about 2100 and 2050 because they know for sure that they come after the next election. But most businesspeople have a horizon of maybe two to three years, in the U.S. even shorter. There needs to be a more robust process created to ensure that the finance [from climate funds and development banks] starts moving in a coherent way. And in that context, I really hope we can see progress on robust and responsible market instruments.”

Because net-zero targets will require trillions of dollars in investment, market participants anticipate that COP26 could spur a frenzy of new global climate financing, including the potential for future $1 billion philanthropy fund and a $100 billion annual climate fund for developing countries. Attendees’ agreement on a rulebook for Article 6 of the Paris Agreement, which address international carbon markets, could ultimately yield $1 trillion per year of capital flows by 2050, according to the International Emissions Trading Association. 

"I think we're beyond this point of ... common but differentiated responsibilities where the developed world has to go first," Rachel Kyte, dean of the Fletcher School of Law and Diplomacy at Tufts University and a climate adviser to the U.N. and to COP26, told S&P Global Market Intelligence. "It's now in the self-interest of every country to reduce emissions as quickly as possible."

Today is Friday, October 29, 2021, and here is today’s essential intelligence.

The Credit Cycle

IG Clubs' Pool Claims Could Force 10% Increases At 2022 Renewal

Losses in 2021 at the 13 protection and indemnity mutuals that make up the International Group could overtake the heavy losses of 2019 and 2020, forcing the clubs to seek the most significant general increases for 10 years.

—Read the full article from S&P Global Ratings

China Property Watch: Strains In The Key Of 'B'

China's property market is known for its boom-and-bust cycles, but the current, contagion-tinged downturn is unusually intense. Contracted sales are faltering as authorities tighten funding. Measures that restrict credit to the property market are hitting developers' liquidity.

—Read the full article from S&P Global Ratings

Online Sales Tax Collections Continue To Grow; Helped Offset Pandemic Declines Last Year

To measure the revenue impact from online sales following the U.S. Supreme Court's 2018 South Dakota v. Wayfair, Inc. decision, which held that states may collect sales taxes from out-of-state sellers, S&P Global Ratings surveyed six cities across several states that are gaining support from online sales activity.

—Read the full article from S&P Global Ratings

U.S. Public Finance Housing Rating Actions: September 2021 And Third-Quarter 2021

S&P Global Ratings' U.S. Public Finance Housing rating actions for the third quarter of 2021 had 10 downgrades and seven upgrades. There were also five favorable and seven unfavorable outlook revisions. The number of downgrades slightly outpacing upgrades highlights the mixed bag of results seen over the various rated housing sectors during the ongoing COVID-19 pandemic.

—Read the full article from S&P Global Ratings

C-Suite Perceptions Of The Changing Public-Private Partnership Landscape

The infrastructure landscape in the U.S. is approaching an exciting period filled with new frontiers and opportunities to revamp outdated models. With that excitement, however, comes a greater burden on government decision-makers to accommodate long-term thinking into their plans.

—Read the full article from S&P Global Ratings

Market Dynamics

Watch: Closing The Retirement Gap With Indices

How can indices help retirees achieve retirement income goals? Nobel Laureate and Resident Scientist at Dimensional Fund Advisors, Dr. Robert Merton joins S&P DJI’s Dan Draper and Aye Soe for a deep dive into the U.S. retirement ecosystem.

—Watch the full video from S&P Dow Jones Indices

Banking Industry Under Pressure

French, Spanish Banks To Retain Provisions As COVID-19 Uncertainty Lingers

Major European lenders such as Barclays PLC and HSBC Holdings PLC began to release some of their COVID-19-related provisions in the second quarter as lockdowns ended and economic activity rebounded. HSBC continued to write back provisions in the third quarter, recording a $659 million release.

—Read the full article from S&P Global Market Intelligence

ANZ To Make Amends After Mea Culpa On Missing Australia's Housing Boom

Australia and New Zealand Banking Group Ltd. has hired more staff and allocated greater resources to its home loans business as it prepares for "what we think will continue to be a pretty active market," CEO Shayne Elliott said after the bank reported a 65% year-over-year rise in its cash profit from continuing operations to A$6.20 billion for the fiscal year ended Sept. 30.

—Read the full article from S&P Global Market Intelligence

ESG in the Time of COVID-19

U.S. REITs Slow To Embrace Green Building Initiative

U.S. real estate investment trusts are under increasing pressure from stakeholders to embrace ESG values, a trend that is expected to drive more REITs to invest in green properties, which are broadly defined as energy-efficient buildings that minimize the impact on the environment and human health.

—Read the full article from S&P Global Market Intelligence

Watch: Countdown To COP26

The 26th Conference of Parties kicks off in Glasgow on the 31st of October. Seven years have passed since COP21, when 196 UN member states and parties signed an agreement to limit global warming below 2 C. COP26 represents the most significant opportunity since those talks to deepen the world's climate commitments, and stay true to the agreed framework. In S&P Global Platts’ 'Countdown to COP26' special, Dan Klein, Head of Future Energy Pathways, S&P Global Platts looks at the key market, policy, and finance themes expected to define this year's talks, and play a crucial role in the evolution of energy markets moving forwards.

—Watch the full video from S&P Global Platts

The Future of Energy & Commodities

Gas Utilities Make Fewer Leak Repairs In 2020 As Monitoring Technology Improved

The number of repairs declined to 457,838, according to S&P Global Market Intelligence analysis of federal data from natural gas utilities with at least 5,000 miles of distribution mains and service lines. It was the first year-over-year drop in the group's repair activity recorded in the available data since 2017.

—Read the full article from S&P Global Market Intelligence

Forward Curve Shape Disincentivizes Near-Term Appalachia Gas Production Growth: Executives

With forward curve data suggesting that the current high price environment will deflate by mid-2022, Appalachia gas producers do not have a real incentive to increase production in the foreseeable future, Range Resources executives told investors at the company's third-quarter earnings call Oct. 27.

—Read the full article from S&P Global Platts

OPEC+ Advisory Committee Expects Group To Stay The Course With 400,000 B/D December Hike

The coalition, which has been raising output by 400,000 b/d per month since August, is under pressure from several consuming countries, including the US, Japan, and India, to further ramp up its output to temper oil prices that have surged amid a global gas crisis, outages, and a lack of oil investments due to climate change pledges.

—Read the full article from S&P Global Platts

Listen: Asian Crude Importers Dip In To Strategic Reserves As Oil Prices Bite

In a shift of strategy to battle surging oil prices, Asia's leading oil consumers India and China have started selling crude oil from their strategic reserves for the first time ever, a sign that import-dependent countries in the region are opening up to the idea of using oil reserves not only at times of geopolitical uncertainty and supply risk, but also as a cushion to ward off financial risk.

—Listen and subscribe to Oil Markets, a podcast from S&P Global Platts

Written and compiled by Molly Mintz.